Correlation Between RCI Hospitality and Apple

Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Apple at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RCI Hospitality and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RCI Hospitality Holdings and Apple Inc, you can compare the effects of market volatilities on RCI Hospitality and Apple and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RCI Hospitality with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Apple.

Diversification Opportunities for RCI Hospitality and Apple

0.87

Correlation Coefficient

RCI Hospitality  Apple

Very poor diversification

The 3 months correlation between RCI and Apple is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and RCI Hospitality is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RCI Hospitality Holdings are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Apple go up and down completely randomly.

Pair Corralation between RCI Hospitality and Apple

Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 2.74 times more return on investment than Apple. However, RCI Hospitality is 2.74 times more volatile than Apple Inc. It trades about 0.22 of its potential returns per unit of risk. Apple Inc is currently generating about 0.21 per unit of risk. If you would invest  3,745  in RCI Hospitality Holdings on October 8, 2024 and sell it today you would earn a total of  1,705  from holding RCI Hospitality Holdings or generate 45.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

RCI Hospitality Holdings  vs.  Apple Inc

RCI Hospitality Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, RCI Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCI Hospitality and Apple

The main advantage of trading using opposite RCI Hospitality and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality position performs unexpectedly, Apple can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Apple will offset losses from the drop in Apple's long position.

The idea behind RCI Hospitality Holdings and Apple Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.